Enron's Ken Lay escapes going to prison

Death Puts Lay Conviction in Doubt
http://www.latimes.com/business/la-fi-lay6jul06,0,5446235.story?coll=la-home-headlines

From the Los Angeles Times
Death Puts Lay Conviction in Doubt
By Thomas S. Mulligan and Miguel Bustillo
Times Staff Writers
July 6, 2006

Since the Enron founder can't appeal, criminal charges may be voided. Civil cases against those tied to the scandal are expected to continue.

The death of Enron Corp. founder Kenneth L. Lay early Wednesday raises the possibility that his conviction could be erased, complicating the federal government's effort to close the books on one of its most ambitious corporate fraud prosecutions.

Lay, who at age 64 succumbed to a massive heart attack at a rented Colorado vacation home, was found guilty by a federal jury in May along with former Enron Chief Executive Jeffrey K. Skilling of conspiracy and fraud. The two were star defendants in the notorious business scandal, which vaporized more than 4,000 jobs and billions of dollars in stockholders' investments.

But when a defendant who pleaded not guilty dies before sentencing, as Lay did, in most cases the conviction is wiped out on the grounds that the defendant did not have the opportunity to appeal, legal experts said.

"Fifth Circuit law in particular is clear on this point," Stanford University law professor Robert Weisberg said Wednesday, referring to the federal region that includes Houston.

Lay and Skilling were scheduled to be sentenced Oct. 23 and were widely expected to face prison terms of more than 20 years. They were convicted of lying to Enron employees and the public as part of a conspiracy to cloak the deteriorating financial condition of a company that claimed $101 billion in annual revenue at its 2000 peak and ranked No. 7 on the Fortune 500.

Only last week, federal prosecutors filed a motion with the Houston trial court seeking to recover $43.5 million that they said Lay had illegally obtained through Enron bonuses and a line of credit extended by the Houston energy company. Weisberg and other experts said that Lay's death might pose obstacles to that effort but that they expected the government to pursue restitution.

"I foresee them fighting tooth and nail," Houston lawyer Philip H. Hilder said.

The Justice Department declined to comment Wednesday. "We'll make a statement at the appropriate time, and the only thing we know is the appropriate time is not today," spokesman Bryan Sierra said.

Lay's death will have little effect on the pending civil fraud lawsuit brought by the Securities and Exchange Commission, or on the massive consolidated lawsuit brought by former Enron employees and shareholders, scheduled for trial in Houston on Oct. 16, said Patrick J. Coughlin of San Diego law firm Lerach Coughlin Stoia Geller Rudman & Robbins, lead counsel in the case.

Coughlin said the main thrust of the case was to obtain hundreds of millions of dollars of additional compensation from the large banks and investment firms that remain defendants. Any assets retained by individual defendants such as Lay and Skilling were too small to make a material dent, Coughlin said.

Skilling's sentencing probably will go forward as scheduled, his lead lawyer, Los Angeles-based Daniel M. Petrocelli, said Wednesday.

"Jeff was distraught over Ken's passing," Petrocelli said. "Jeff and Ken go back over 20 years. They were close friends. Jeff is going to miss him dearly."

Lay had been a confidant and political contributor to President Bush and his father, President George H.W. Bush. White House spokesman Tony Snow on Wednesday sought to downplay any intimacy between the president and the disgraced former Enron head.

"The president has described Ken Lay as an acquaintance, and many of the president's acquaintances have passed on during his time in office," Snow said in a morning news briefing.

Lay's death ended his personal pursuit of one of his last publicly stated goals: clearing his name.

"I firmly believe that I am innocent of the charges against me, as I have said from day one," Lay said in a statement posted on his website soon after the May 25 verdict. He added: "I will continue to work diligently with my legal team to prove that."

A ruling wiping out Lay's conviction would leave him with a clean legal record, technically speaking, but it probably would do little to erase the taint of scandal.

According to the Pitkin County, Colo., coroner's office, coronary artery disease was the cause of the attack that killed Lay at a vacation home near Aspen. An autopsy showed evidence of a previous heart attack.

However, friends left no doubt that the stress and humiliation of Lay's ordeal played a role in his death.

"Some people will say he was as guilty as sin and this is God's judgment, but I for one will choose to remember the positive things about Mr. Lay," said the Rev. William Lawson, 78, founding pastor of Wheeler Avenue Baptist Church in Houston.

"He lost everything he had, and he took that very hard," said Lawson, who testified as a character witness for Lay during the four-month trial. "I think he had this heart attack because he internalized all of this stress."

Outgoing and courtly, Lay was expected to make a more positive impression on jurors than Skilling, a hard-driving executive whose own lawyer described him as "antisocial."

But on the witness stand, a testy and impatient side of Lay emerged. He sparred vigorously with federal prosecutor John C. Hueston and even showed flashes of irritation under questioning by his own defense lawyer.

Two jurors said during a post-trial news conference that Lay's credibility was damaged by evidence that he quietly sold $70 million of Enron stock back to the company during 2001, while allowing the public to think he was a buyer.

"That just defined the word 'intent' for many of us," juror Doug Baggett said.

The jurors found Lay guilty of all the charges he faced: one count of conspiracy and five counts of fraud. They convicted Skilling of one count of conspiracy, 12 counts of fraud, five counts of making false statements and one count of insider trading. He was acquitted of nine other insider-trading counts.

In addition, after a separate three-day nonjury trial, U.S. District Judge Sim Lake found Lay guilty of one count of bank fraud and three counts of making false statements to banks while arranging bank lines of credit.

When the federal jury trial began in late January, many Houstonians said the city had moved beyond the feelings of anger and betrayal that accompanied the downfall of what had once been one of its biggest business success stories.

But beneath the surface, hard feelings continued to fester, as shown by the reaction of some callers to news radio KTRH-AM (740) in Houston scant hours after Lay's death. More than one caller expressed doubts that Lay really was dead and wondered whether the reports of his demise weren't part of an insurance scam.

Next to Houston, where thousands lost their jobs and life savings when Enron collapsed, the West Coast ?- and California in particular ?- was ground zero for the anti-Lay backlash. The company was accused of worsening California's energy crisis of 2000-01 by using trading schemes that drove up prices and pinched supplies.

"We cannot allow his death to rehabilitate his image," said state Sen. Joe Dunn (D-Santa Ana), who headed a special committee that investigated the charges of market manipulation. "This is a man who is responsible for damaging millions of lives."

It was a bitter legacy for a rural Missouri preacher's son who had long been known as an essential player in Houston's important civic and philanthropic projects.

Lay, more than any other individual, was credited as the driving force behind passage of the referendum to build the curved-steel stadium originally named Enron Field and now known as Minute Maid Park, home of Major League Baseball's Houston Astros.

Enron's name was supposed to grace the ballpark for 30 years. But it did so only for two. After the company's bankruptcy made Enron's name synonymous with corporate scandal, the Astros canceled the deal.

"Ironically, we had to buy the rights back from the bankruptcy court," team owner Drayton McLane Jr. said.

Steve Wende, pastor of Lay's church, First Methodist Church in Houston, said he learned of his friend's death from Lay's family before dawn Wednesday.

Wende said the two had spoken last week and that Lay understood he was probably going to prison. "Though there was an appeals process, he was not naive," the minister said.

"What was noteworthy about Ken Lay was that at the height of his wealth and fame, he used it to lift other people up," Wende said.

"The Lays lived well. But when you get down to it, there are a lot of wealthy people who live well in America, and there are not too many who go out of his way to help others the way he did. He was always the pastor's son."
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Mulligan reported from New York and Bustillo from Houston. Staff writers Nicholas Riccardi in Denver and Martin Zimmerman in Los Angeles contributed to this report.

Fifteen Things To Remember About Kenneth Lay and Enron:
Fifteen Things To Remember About Kenneth Lay and Enron:

1). Mr. Lay and his company were among the largest campaign contributors to George W. Bush throughout his political career;

2). In 2000, Mr. Lay provided candidate George W. Bush with use of the Enron company jet for the campaign;

3). Mr. Lay was on President Bush's short list for nominees to be his Secretary of Energy;

4). Mr. Lay vetted President Bush's choice to head the Federal Energy Regulatory Commission;

5). Mr. Lay was a key participant in Vice President Dick Cheney's secret "Energy Task Force";

6). Mr. Lay met with Cheney to ask him to block the FERC from capping California's energy prices during the Enron-manufactured energy "crisis";

7). President Bush's first Secretary of the Army, Thomas White, was a former Enron executive who moved to de-regulate how the Army purchased energy;

8). Attorney General Alberto Gonzales got his start as a lawyer for Vinson and Elkins whose main client at the time was Enron;

9). Republican strategist and White House go-to guy, Ed Gillespie, was formerly a lobbyist for Enron;

10). Mr. Lay testified and spent millions of dollars to promote de-regulation of energy markets at the state and federal level by making the bogus claim that such de-regulation would benefit consumers;

11). Mr. Lay and Enron, after successfully pushing energy de-regulation in California with the help of cronies in government, immediately let loose their young traders who gamed the market by illegally restricting the supply of energy, thereby reaping billions of dollars in ill-gotten profits for the company;

12). Mr. Lay gave far more campaign cash to Republicans and was himself a life-long Republican, (the mainstream media imply that since Lay threw a little cash at Democrats his political giving was nonpartisan);

13). The New York Times tells us that in the wake of Mr. Lay's conviction some business schools are now offering "ethics classes," but ignores the fact that Enron's slash-and-burn practices -- "special purpose entities," "limited partnerships," off-shore accounts, and its cooptation of politicians, investment banks, and accounting firms -- has itself become a business model;

14). Businessweek, Forbes, Fortune, and the business pages of the nation's leading newspapers, held up Mr. Lay as a hero of business right up to his company's spectacular collapse;

15). The dark implications of President Bush's tight connections to "Kenny Boy" and to Enron.

OK, you obviously have nothing but disdanin for Lay and exultation in his death.

But know that I will be there when you bemoan the execution of rapists and murderers.

BBB




BBB

BBB
Does anyone on A2K feel sorry for Ken Lay?

BBB

Re: BBB


and does anyone on A2K really think a person could be so stupid as to compare an execution to a heart attack?

Re: BBB


I certainly feel sorry for people who loved him.

Gotta tell you, BBB, this thread has a definite Coulter nastiness flavour to me. Widows enjoying their husband's deaths, Ken Lay 'escaping' prison. This way of thinking is ugly to me.

IMO, having that heart attack was too good for him.

BBB asked-



See 8th post down on page 1.

Re: BBB


I have to respectfully disagree with you ebeth.

Widows enjoying their husbands deaths= pure hateful pot stirring diguised as subjective observation.

Ken Lay comitted suicide to prevent jail and help his family keep assets and money= a contingency that was considered by many and there is precedent for it. Also, it has been posted post death that the autopsy revealed no foul play.

I will not deny that BBB, I, and many others think he was an a$$hole and feel no sympathy for him but that's different from the Coulter approach. This guy died and there is a certain irony to the circumstances. There is absolutely no grounds whatsoever for Coulter to state that the 9/11 widows were enjoying their husbands deaths.

Let's don't fight though.

Thanks for taking the time to say it, Bear.
Most of us try to be good people and have good thoughts towards our fellow human beings but your comparison ehbeth was pretty absurd.

Re: BBB


ehBeth, my question was limited to sorrow about Ken Lay, not the people who loved him.

Obviously, I and others may feel sorry for the family, even if they benefited from Lay's larceny. But I have no sorrow for Ken Lay. He managed to protect his family's financial interests after all.

I would be shocked and heartbroken if you considered me to be equal to Ann Coulter.

BBB

I wonder how many heart attacks, strokes, divorces, etc. were suffered by the poor unfortunates who lost everything at the hands of Ken Lay and Co.? I remember one story about a man who moved his family from Michigan to Houston to take a position just a few weeks before the collapse. The wife, a professional, left her high-ranking position, one kid was in college, two in high school, and it was all riding on dad's new job at Enron. To think that people were being lured away from other high-paying positions, moving across the country and hired by a company who pulled the rug out from under them, hiding the fact that it was going down in flames, was heartless, to say the least. I feel no pity for Ken Lay. None at all.

In the recent Bangor paper there was an editorial cartoon.It showed Ken Lay standing in front of a giant satan . And Satan speaks
"Wlle Ken, I see you have one of our "get out of jail free" Cards"

Friends remember Lay at memorial service
By KRISTEN HAYS, AP Business Writer
Wed Jul 12, 2006

HOUSTON - Enron Corp. founder Kenneth Lay was a high-powered businessman, philanthropist and family man who didn't succumb to despair despite the scandal that destroyed his company and left him a vilified felon, friends and family members said at a memorial service Wednesday where mourners included former President George Bush.

Lay's 90-minute service drew some of the high-profile guests who were close to him before he was convicted in May of fraud and conspiracy for lying to investors and the public about the energy company's financial health. Enron collapsed in late 2001.

Neither the Bushes nor former Secretary of State James Baker III, Houston Astros owner Drayton McLane Jr. and noted heart surgeon Denton Cooley spoke. The Bushes sat directly behind Lay's wife, Linda.

Instead, Lay's family and friends sought to show a kinder view of him than had been seen publicly since the company's collapse. Some expressed bitterness over their ?- and Lay's ?- steadfast belief that he was wrongly convicted in one of the biggest corporate frauds in history.

"I am angry because of the way he was treated in the last five years of his life, and I think I'll leave it there, leave it at that," said Lay's stepson, David Herrold, who attended much of the four-month trial.

"I am glad he's not in a position anymore to be whipped by his enemy," Herrold said to the hundreds in attendance at Houston's First United Methodist Church, which Lay attended for 12 years.

His mother, Linda Lay, dabbed tears with a handkerchief.

Lay died of heart disease July 5 in Aspen, Colo., where he was vacationing with his wife. About 200 friends and family, including his co-defendant, former Enron chief executive Jeffrey Skilling, attended a small memorial service there on Sunday.

But Skilling decided not to attend Wednesday's service because of heavy media coverage, said his attorney, Daniel Petrocelli. His wife, former Enron corporate secretary Rebecca Carter, attended both services.

As guests entered the sanctuary, they passed a framed photo of a smiling Lay wearing a red Enron T-shirt, blue athletic shorts and gym shoes. Two large bouquets of sunflowers sat on either side of the pulpit, while two burning candles sat on each side of an open Bible in the center.

The Rev. Bill Lawson, prominent pastor of the African-American Wheeler Avenue Baptist Church in Houston, said the Lay he knew wasn't the target of late-night TV jokes or a pariah. Lawson called Lay a "victim of a lynching" and praised mourners for staying friends with him through the scandal.

"The folks who don't like him have had their say. I'd like to have mine and I don't care what you think about it," he said, eliciting brief applause. "Now his grandchildren won't ask, `Why is Papia in jail?' No more persecution. That is behind him," Lawson said.

Lawson evoked leaders who he said were vilified in life but vindicated by history, including the Rev. Martin Luther King Jr., John F. Kennedy and "our Lord Jesus Christ."

Minutes before Wednesday's service began, shrieks pierced the sanctuary as Lay friend and former Houston Mayor Bob Lanier, 81, collapsed in an aisle. Carter and Lawson comforted Lanier's distraught wife, Elyse, before paramedics whisked him to a hospital, where was in stable condition with an irregular heartbeat.

Lay and Skilling were the faces of Enron throughout the company's meteoric rise from a stodgy pipeline company to a powerhouse energy trader.

Their reputations shattered alongside the company as their images switched from business visionaries to perpetrators of fraud that fueled a spectacular crash that evaporated $60 billion in market value and left thousands jobless.

A jury convicted Lay of six counts of fraud and conspiracy and Skilling of 19 of 28 counts of fraud, conspiracy, insider trading and lying to auditors. Lay also was convicted of bank fraud and lying to banks in a separate, non-jury trial related to his personal banking.

Lay died awaiting their Oct. 23 sentencing, and his lawyers are expected to ask a judge to erase his conviction because his death left his case unfinished. Skilling still faces sentencing on that date and could be ordered to serve decades in prison.

Beau Herrold, another Lay stepson who manages the family's finances, read from a letter he had begun writing to U.S. District Judge Sim Lake that he intended to deliver before Lay's sentencing.

In the letter, he described Lay as a devoted husband, father, grandfather and brother who "always found a way to make time for family." Lay is survived by his wife, children, two sisters and 12 grandchildren.
-----------------------------------------------

Associated Press photographers David Phillip and Pat Sullivan, viedographer Rich Matthews and writer Chris Duncan contributed to this report.

There are rumours published here that Ken Lay's death is a stunt, that friends in high places have arranged his disappearance.

Anyone heard anything about that?

Hadn't heard that but, it's not a surprising theory when considering that circle of skunks and snakes.